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Suppose that every day, ten men go out for beer and the bill for all ten comes to $100…

If they paid their bill the way we pay our taxes, it would go something like this…

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball.
“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20″. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men? How could they divide the $20 windfall so that everyone would get his fair share?

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.

And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,”but he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works.
The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

http://ymarsakar.wordpress.com Ymarsakar

Sadie, that’s what the iron curtain, martial law, and using America’s military spy assassination drones are for, the Left thinks in secret.

Mike Devx

Book’s post is great. SADIE’s tax post in #1 is really awesome!

http://furtheradventuresofindigored.blogspot.com/ Indigo Red

Get another credit card and pay the debt. DUH!

(I was a Liberal Denocrat once.)

SADIE

I guess you’ve all heard that Zippy wants students to vote for him again. What a guy. And just when the grads might be thinking ..hmmm, I’ve got debt, no job, no prospects but I’ve got Zippy to save me and what the hell, he can buy my vote with your money.

Just loved the way the author of the article framed this out….

Take this example: If Suzy Creamcheese gets into George Washington University and borrows from the government the requisite $212,000 to obtain an undergraduate degree, her repayment schedule will be based on what she earns. If Suzy opts to heed the president’s call for public service, and takes a job as a city social worker earning $25,000, her payments would be limited to $1,411 a year after the $10,890 of poverty-level income is subtracted from her total exposure.

If you include unfunded liabilities of the U.S. and State governments, the actual outstanding debt on the credit card is not $142,700 but closer to $1,010,000. We are already bankrupt…we just haven’t acknowledged it.

Mike Devx

Danny L says: If you include unfunded liabilities of the U.S. and State governments, the actual outstanding debt on the credit card is not $142,700 but closer to $1,010,000. We are already bankrupt…we just haven’t acknowledged it.

Danny, the future liabilities are there, but at least we are not committed to them yet – though I don’t see a way to avoid most of them in the future. But our current debt is actually owned by somebody or other (foreign nations, the Fed, banks, etc), and they can and will get that money from us one way or another. Future liabilities… we are not yet on the hook for.

I just read that our federal spending is 3.7 trillion, of which 0.5 trillion (500 billion) is interest payment on the current debt. That’s only going to go up and up. That currrent figure may not seem like much, but it’s 13.5%. (0.5/3.7). It’s one of our big ticket budget items, as follows:

If the budget was $3.7 trillion, then that leaves only $0.4 trillion for all other expenditures of our national government.

That $500 billion in interest payments is free money to whoever holds our debt, and it’s only going to get higher. They, whoever they are, will be more than happy to keep receiving that free money forever into the future – they do *not* want us to reduce our debt. As long as we don’t default, they’re thrilled. Free money! From the taxpayers to them.

What are we getting in exchange for being allowed to have to spent all that debt money? Look around you: False bubbles of prosperity that can’t be sustained, leaving us with the current economic mess. Obama added 1.7 and 1.4 trillion in debt for 2009/2010, much of that in his “Stimulus”… but he didn’t even get a fake bubble of prosperity out of it! Or may God help us if this is what “fake bubble of prosperity” looks like.

So when we moan and groan about all the entitlements money going out to Social Security, Medicare, Medicaid, Unemployment and Welfare (and even defense), don’t forget the recipients of the debt interest. They’re getting their entitlements too.

Instead of saying “I am the 99%”, I’m down on things today, and my saying today for America is: “We are the Greek”. We’re no different from them, and we’ll be just as incapable of handling the catastrophe when it hits us. I’m pessimistic. Hopefully, it’s just a bad day, but today I’m extremely pessimistic about our future.